In the new millennium, things are quite different. Even before the pandemic, job tenure has been on the decline. The average employee once stayed around five years in a role; a 2021 report from the Bridge Group found tenure today to be as low as only 1.8 years.
To make matters worse, companies now grapple with an even greater post-pandemic problem known as the “great resignation.” As remote work grows in popularity and geography no longer factors into hiring, it’s not a complete surprise that a record 4 million people quit their jobs in April, and one in four workers plans to look for a new job after the pandemic.
This mass exodus coupled with the pandemic-led reduction in headcount and budget creates a major talent shortage for employers everywhere. So, what can you do about it?
First, Let’s Understand The True Cost Of Turnover
The impact of an employee leaving spans far beyond just headaches for your HR team. It can wreak financial havoc across an organization. The average cost of replacing just one employee ranges from one-half to two times their annual salary. To put it in context, for a 100-person company with an average salary of $60,000, your turnover replacement costs could be anywhere between $750,000 and $3 million.
Financial losses aside, there are also hidden costs of turnover. The departure of great people can significantly influence team morale and places an unnecessary burden on remaining employees who acquire the extra workload. All too often, the ripple effect of leaving causes employees to question if they, too, should jump ship. Further, the “tribal knowledge” loss makes the segue from replacing a seasoned employee with a new hire even more difficult.
Between the expenses of hiring, onboarding, training, and the time and costs of an unfilled role, there’s never been a better time to rethink your retention strategy.
What Makes Employees Stay?
Historically, employee turnover has been driven by the need for a better salary, more flexibility, or lack of advancement opportunities. Yet as we move into our “new normal,” employees are looking outside these traditional factors, evaluating more than just salary and title when choosing whether or not to remain in their roles. Specifically, they value:
- Culture: In a survey of 2,000 employees, 34% said corporate culture was the main reason they were looking for a new role.
- Empathy: Ninety-two percent of employees said they’d be more likely to stay with their job if their managers showed more empathy.
- Engagement: Engaged employees are 59% less likely to seek out a new job.
Unfortunately, building an engaging culture is a resource-heavy, long-term approach that can take time to establish. Thankfully, there is a short-term, more cost-effective solution that is relatively simple and positively impacts retention: training.
- Organizations with a strong onboarding process improve employee retention by 82% and productivity by more than 70%.
- LinkedIn’s 2020 Global Talent Trends Report notes that companies that rank highly for employee training see 53% lower attrition.
With figures like these, it’s easy to understand why corporate training budgets have risen over recent years. Specifically, the global spend for eLearning solutions is projected to hit $325 billion by 2025. The need to replace in-person training with a streamlined, effective solution only furthered the exponential growth of corporate training tools.
But sadly, 2020 brought rapid cuts to just about everyone, and hiring and onboarding initiatives were forced to take a backseat during a time of considerable turnover. Those who remained in their roles were also affected as workplace training expenditures decreased, dropping from $93.6 billion in 2017 to $82.5 billion in 2020.
Although these budget cuts are understandable, the sad truth is that the average midsize company in the U.S. spent just $581 per employee in 2020, and large companies cut their training budgets by over 40%. With so little left to invest in your employees, it’s no surprise they’re looking elsewhere.
Training Increases Engagement, Retention, And Revenue
The time has come for us to adjust our way of thinking. Historically, companies viewed employee training as a cost center related to new employee onboarding rather than an investment in their long-term success. Yet as evidenced earlier, a strong training program can reduce attrition and increase employee engagement across the organization. And while implementing new training software and onboarding programs may seem overwhelming, especially as we’re climbing out of a major economic setback, modern training solutions designed around today’s remote and digital workplace challenges are getting easier to implement than ever before.
There’s a lot that’s out of your control regarding employee retention, especially in today’s ever-increasing competitive landscape where the geographic advantage of being the “hottest” employer in your town is long gone. It’s high time to double-down on the lower-lift strategies that data shows have a huge impact on your culture and employee engagement and shift the conversation from “Now isn’t the time to invest more in training” to “Where do we start?”
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